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NBEUB MATTER 375 5
NB Power 2018-2019 General Rate Application and Request for Approval of AMI Capital Project 6
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Evidence Submitted by: 12
Chris Rouse 13
New Clear Free Solutions 14
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59 Summerville Rd 16
Summerville NB 17
E5S 1G6 18
New Clear Free Solutions Evidence Matter 375
1 January 18 2018
TABLE OF CONTENTS 1
1.0 INTRODUCTION .................................................................................................. 4 2
2.0 LEGISLATIVE INTERPRETATION ...................................................................... 6 3
2.1 How Should the Legislation be Interpreted? ......................................................... 6 4
2.2 Should the “Should”s and “Shall”s in Section 68 of the Electricity Act be 5
interpreted as both being legislated requirements? - No ...................................... 8 6
2.3 What guidance does Section 68 (a) of the act give? .......................................... 10 7
2.4 What guidance does Section 68 (b) of the act give? .......................................... 11 8
2.5 What are the requirements of Section 68 (c) and the conditions put on those 9
requirements? .................................................................................................... 12 10
2.6 Is it plausible that section 68 (b) (iii) “least cost of service to customers” is meant 11
to be interpreted as least cost revenue requirement as compared to least cost 12
rates? No ........................................................................................................... 13 13
2.7 Does section 103 (7) of the act require the board to approve NB Powers revenue 14
requirement when approving just and reasonably rates? - No ............................ 15 15
2.8 If the board is not given direct control over operational and capital spending 16
under $50 million how does it regulate NB Power spending? Rates ................... 16 17
2.9 How should the board interpret lowest possible rates for this hearing? Current 18
Rates ................................................................................................................. 16 19
2.10 How should the board balance NB Powers corporate objective of 20% equity and 20
lowest possible rates? ........................................................................................ 16 21
2.11 Is it plausible that the legislation intended the AMI cost benefit to not include lost 22
revenue from the reduced Kwh? No ................................................................... 17 23
2.12 Who does the legislation assign responsibility to develop the IRP? NB Power ... 17 24
2.13 What are the requirements put on the development of the IRP in section 100(2) 25
of the Act?.......................................................................................................... 18 26
2.14 Who approves the IRP? Executive Council ........................................................ 18 27
2.15 Who reviews and informs the Executive Council about the IRP? The Board ...... 18 28
2.16 Who has final approval of the capital projects within the IRP? The Board .......... 19 29
3.0 RATE INCREASE .............................................................................................. 20 30
3.1 Should the Board grant the 2% average rate increase? - No ............................. 20 31
3.2 Can you provide an graphical overview of the proposed electrode boiler DSM 32
program? Yes .................................................................................................... 23 33
3.3 Which of the California Tests Should the Board use to test NB Powers DSM 34
programs? All of them ........................................................................................ 24 35
4.0 ADVANCED METERING INFASTRUCTURE .................................................... 25 36
4.1 Should the Advanced Metering Infrastructure be approved? - No ...................... 25 37
4.2 What is 'Net Present Value - NPV'? ................................................................... 25 38
5.0 RATE ADJUSTMENT MECHANISM ................................................................. 26 39
5.1 Should the board approve the rate adjustment mechanism? No ........................ 26 40
6.0 INTEGRATED RESOURCE PLAN .................................................................... 27 41
New Clear Free Solutions Evidence Matter 375
2 January 18 2018
6.1 How should the board consider the IRP in both determining rates and approval of 1
capital project in these hearings? ....................................................................... 27 2
6.2 What additional information should the board order NB Power to include in the 3
next iteration of the IRP to be approved by Executive Council? ......................... 27 4
6.3 Is the proposed supply plan by NCFS in the “What was said” portion of the IRP 5
technically feasible? Yes .................................................................................... 29 6
6.4 Is the proposed supply plan by NCFS, in the “What was said” portion of the IRP, 7
materially different economically than the modeling NB Power did in matter 336 8
and Exhibit NBP14.58 of this hearing using the strategist modeling software? No30 9
6.5 Is NB Powers IRP consistent with the new Climate Change Act tabled 10
legislation? No ................................................................................................... 31 11
6.6 Is NB Powers IRP putting the province at substantial financial risk of getting the 12
Federal Backstop being applied to New Brunswick? YES .................................. 32 13
6.7 Is the proposed Climate Change Act, that is tabled in the legislature, 14
fundamentally different than the policy NCFS has been promoting since Matter 15
272? No ............................................................................................................. 33 16
6.8 Do you think the proposed Climate Change Act that is tabled in the NB 17
Legislature the best in the country and a model to be followed by other 18
Provinces? Yes .................................................................................................. 34 19
6.9 Of all the Sensitivity Analysis performed By NB Power can you rank them in 20
order from least cost rates to highest cost rates and indicate which ones have 21
wind power in them? Yes ................................................................................... 35 22
6.10 Are the assumptions for capital costs and O and M costs for wind power, that 23
was used in NB Powers IRP, reasonable compared to other reliable sources of 24
publicly available data or actual cost? No .......................................................... 36 25
6.11 Is NB Powers long-term load forecasts reasonable? No .................................... 36 26
6.12 Is NB Powers long-term fuel prices reasonable? No .......................................... 36 27
6.13 Can you provide some background information resources on the strategist 28
software? Yes .................................................................................................... 36 29
6.14 Can you provide some additional background resources on efficiency cost 30
effectiveness? Yes ............................................................................................. 36 31
7.0 10 YEAR PLAN .................................................................................................. 37 32
7.1 What additional information should the board order NB Power to include in the 33
next 10 year plan? ............................................................................................. 37 34
8.0 LIST OF ATTACHMENTS.................................................................................. 38 35
8.1 Attachment A Pan Canadian Wind Energy Study Atlantic Summary .................. 38 36
8.2 Attachment B Pan-Canadian Wind Integration Study Summary Report ............. 38 37
8.3 Attachment C Lazard’s Levelized Cost of Energy Analysis—Version 11.0 38
Summary ........................................................................................................... 38 39
8.4 Attachment D Letter to Anonymous Reader by NCFS ........................................ 38 40
8.5 Attachment E lazard-levelized-cost-of-energy-version-110 ................................ 38 41
8.6 Attachment F California Standard Practice Manual ............................................ 38 42
8.7 Attachment G Strategist Planning Solution ........................................................ 38 43
8.8 Attachment H Xcel Energy Strategist Modeling and Outputs .............................. 38 44
8.9 Attachment I Understanding Cost-Effectiveness of Energy Efficiency Programs 38 45
8.10 Attachment J Bill 39 Climate Change Act ........................................................... 38 46
New Clear Free Solutions Evidence Matter 375
3 January 18 2018
8.11 Attachment K EIA Cost and Performance Characteristics of New Generating 1
Technologies Annual Energy Outlook 2017 ....................................................... 38 2
8.12 Attachment L IRENA_2017_Power_Costs_2018_summary ............................... 38 3
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New Clear Free Solutions Evidence Matter 375
4 January 18 2018
1.0 INTRODUCTION 1
This evidence is submitted by Chris Rouse on behalf of New Clear Free Solutions to the New 2
Brunswick Energy and Utilities Board (“NBEUB”). The mandate of New Clear Free Solutions is 3
to provide energy oversight to the public and official decision makers using scientifically 4
objective regulatory and financial information. The objective of New Clear Free Solutions is 5
to help ensure safe, affordable, and sustainable energy solutions for the Canadian public and 6
environment. 7
New Clear Free Solutions seeks the following decisions from the Board: 8
-Deny the requested 2% rate increase; 9
-Deny the Advanced Metering Infrastructure Capital Spending; 10
-Deny the requested rate adjustment mechanism; 11
-Order additional information for next year’s 10-Year Plan (section 101 (2)) 12
-Order additional information to be included in the IRP and submitted to executive council 13
for approval (section 100 (3)) 14
-Qualify Chris Rouse, Industrial Control Technologist, as an expert witness in the field of 15
systems engineering/integration, project management, quality management, Industrial 16
energy systems, safety, integrated resource planning and government regulation and policy 17
We admire NB Powers first strategic objective of becoming top quartile. This a great objective 18
that should inform and set the basis for the rest of its objectives. 19
We think up until this point, NB Powers second strategic objective, to attempt to pay down some 20
debt and not take on any big capital spending to build some equity, was a generally good idea. It 21
has also given the chance for the utility to resolve performance and safety issues at Lepreau, 22
which seems to be working under the new management. By taking it slow the last few year New 23
Brunswick didn’t make any big mistakes, like signing high priced long-term wind power 24
contracts to private companies and have gotten a chance to really see how renewables are going 25
to perform, and waited for the costs to come down. 26
New Clear Free Solutions also thinks the smart grid is a really good idea too, but a smart grid 27
that is optimized to Reduce and Shift Demand was a bad idea and not in anyone’s interest. We 28
are also pleased NB Power has rebranded it’s Reduce and Shift Demand program to Energy 29
Smart. We encourage NB Power to not just rename the program but to fundamentally change it. 30
This was a good plan while it lasted but things are different now and we need a true vision for 31
sustainability and a clear path to get there. We are on the cusp of making some mistakes to the 32
benefit of nobody and encourage the Board and NB Power to really step back and have a good 33
hard look at the problem and what the real solutions are. Most of the solutions have been 34
revealed in Matters 272, 336 and in this matter. 35
New Clear Free Solutions Evidence Matter 375
5 January 18 2018
1
The time for doing nothing is over and NB Power needs to have three new strategic objectives. 2
Our suggested new objectives are as follows: 3
4
Strategic Objective 1 Be Best at what we do in the following key areas: 5
Lowest Rates 6
Lowest Emissions 7
Highest Reliability 8
Highest Safety 9
Highest Value to Shareholders 10
11
Strategic Objective 2 Build equity by Investing the Carbon Tax and Reinvesting the 12
Earnings for the benefit of all New Brunswickers for now and in the future 13
Strategic Objective 3 Increase Load by Shifting Fossil Fuels to Low Carbon Renewable 14
Electricity 15
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New Clear Free Solutions Evidence Matter 375
6 January 18 2018
2.0 LEGISLATIVE INTERPRETATION 1
New Clear Free Solutions provides the following guidance to the Board regarding how best to 2
interpret the legislative scheme underpinning these proceedings. Specifically, New Clear Free 3
Solutions seeks to provide the following comments on legislative intent in the context of 4
approving lowest possible, and stable and predictable rates and approving capital projects over 5
$50 million. 6
2.1 How Should the Legislation be Interpreted? 7
A starting point for understanding the provisions in the Electricity Act, SNB 2013, c 7, is the 8
Interpretation Act of New Brunswick. Section 12 of the Interpretation Act states: 9
10
An Act or regulation shall be considered as always speaking, and whenever a matter or thing is 11
expressed in the present tense, it shall be applied to the circumstances as they arise, so that effect 12
may be given to the Act or regulation and every part thereof according to its true spirit, intent 13
and meaning.1 14
15
Secondly, common law principles of statutory also guide how the Electricity Act should be interpreted in 16
these proceedings. For instance, the modern principle of statutory interpretation posits the following: 17
Today there is only one principle or approach [to statutory interpretation], namely, the words of 18
an Act are to be read in their entire context and in their grammatical and ordinary sense 19
harmoniously with the scheme of the Act, the object of the Act, and the intention of Parliament2 20
This approach to statutory interpretation has been repeatedly endorsed by the Supreme Court of Canada 21
and remains the prevailing and preferred approach to statutory interpretation.3 22
Applying the modern principle of statutory interpretation requires the Board to analyze: 23
(i) the meaning of the legislative text; (ii) the legislature's intentions, including the rule it 24
intended to enact, the purpose it hoped to achieve and its intentions (if any) regarding specific 25
facts; and (iii) the consequences of adopting a proposed interpretation.4 26
Furthermore, arriving at an interpretation of a statute requires justification on the basis of: 27
28
29
1 RSNB 1973, c I-13 2 Re Rizzo & Rizzo Shoes Ltd., [1998] S.C.J. No. 2 at para. 21, [1998] 1 S.C.R. 27 (S.C.C.). as cited in Halsbury’s Laws of
Canada, “The Modern Principle of Statutory Interpretation”, at para HLG-54 3 Ibid; 65302 British Columbia Ltd. v. Canada, [1999] S.C.J. No. 69 at para. 50, [1999] 3 S.C.R. 804 (S.C.C.); R. v. Sharpe,
[2001] S.C.J. No. 3 at para. 33, [2001] 1 S.C.R. 45 (S.C.C.); Bell ExpressVu Limited Partnership v. Rex, [2002] S.C.J. No. 43 at para. 26, [2002] 2 S.C.R. 559 (S.C.C.); Redeemer Foundation v. Canada (National Revenue), [2008] S.C.J. No. 47 at para. 15, [2008] 2 S.C.R. 643 (S.C.C.); R. v. Ahmad, [2011] S.C.J. No. 6 at para. 28, 2011 SCC 6 (S.C.C.); R. v. L.B., [2011] O.J. No. 891 at para. 51 (Ont. C.A.).
4 Halsbury’s Laws of Canada, “The Modern Principle of Statutory Interpretation”, at para HLG-55; Ruth Sullivan,
Sullivan on the Construction of Statutes, 5th ed. (Markham, ON: LexisNexis Canada, 2008) at 3.
New Clear Free Solutions Evidence Matter 375
7 January 18 2018
(a) its plausibility, that is, its compliance with the legislative text; (b) its efficacy, that is, its 1
promotion of legislative intent; and (c) its acceptability, that is, the outcome complies with legal 2
norms so that the result is reasonable and just5 3
4
Lastly, in its analysis, the Board must also apply the ordinary meaning rule, wherein the following is 5
presumed: 6
7
(1) It is presumed that the ordinary meaning of a legislative text is the meaning intended by the 8
legislature. In the absence of a reason to reject it, ordinary meaning should prevail.6 9
(2) However, even if the ordinary meaning seems clear, courts must also consider the entire 10
legislative context of the provision to be interpreted,7 including not only the text of the statute in 11
which the provision appears, but also legislative purpose, relevant legal norms and relevant 12
extrinsic aids. 13
(3) In light of these additional considerations, the court may adopt an interpretation that 14
modifies or departs from the ordinary meaning, provided the interpretation adopted is plausible 15
and the reasons for adopting it are sufficient to justify departure from ordinary meaning.8 16
Should the Board or a party to this proceeding seek to rely on an interpretation of the legislative text 17
which departs from the ordinary meaning of a phrase or term, they bear the burden of proof in 18
demonstrating that an interpretation other than the ordinary meaning is intended.9 19
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5 Ibid; Ruth Sullivan, Sullivan on the Construction of Statutes, 5th ed. (Markham, ON: LexisNexis Canada, 2008) at 3. 6 See, for example, Thomson v. Canada (Deputy Minister of Agriculture), [1992] S.C.J. No. 13 at para. 25 (S.C.C.),
where a majority of the Supreme Court of Canada adopted the ordinary meaning of the term “recommendations” because it found no basis for rejecting it, Cory J. noted: “There is nothing in either the section or the Act as a whole which indicates that the word 'recommendations' should have anything other than its usual meaning.” See also F. (M.) v.
Sutherland, [2000] O.J. No. 2522 at paras. 28-29 (Ont. C.A.). 7 See, for example, Chieu v. Canada (Minister of Citizenship and Immigration), [2002] S.C.J. No. 1 at para. 34, [2002] 1
S.C.R. 84 (S.C.C.), where Iacobucci J. noted: The grammatical and ordinary sense of the words employed [in a provision] is not determinative … . Instead [the provision] must be read in its entire context. This inquiry involves examining the history of the provision at issue, its place in the overall scheme of the Act, the object of the Act itself, and Parliament's intent both in acting the Act as a whole, and in enacting the particular provision at issue. See also Bristol-Myers Squibb Co. v. Canada (Attorney General), [2005] S.C.J. No. 26 at para. 43, [2005] 1 S.C.R. 533 (S.C.C.); Montréal (City) v. 2952-1366 Québec Inc., [2005] S.C.J. No. 63 at paras. 9ff, [2005] 3 S.C.R. 141 (S.C.C.). 8 Halsbury’s Laws of Canada, “Determining the Meaning of the Legislative Text”, at para HLG-59;
See, for example, Toussaint v. Canada (Minister of Citizenship and Immigration), [2011] F.C.J. No. 636 at paras. 35- 36,
2011 FCA 146 (F.C.A.), leave to appeal refused [2011] S.C.C.A. No. 295 (S.C.C.), where the court agreed that the
proposed interpretation of susbection 25(1) of the (CAN) Immigration and Refugee Protection Act, S.C. 2001, c. 9 Ibid
New Clear Free Solutions Evidence Matter 375
8 January 18 2018
2.2 Should the “Should”s and “Shall”s in Section 68 of the 1
Electricity Act be interpreted as both being legislated 2
requirements? - No 3
New Clear Free Solutions directs the Board to section 68 of the Electricity Act which reads: 4
PART 4 5
GOVERNMENT POLICY 6
Electricity policy of the government 7
68 It is declared to be the policy of the Government of New Brunswick 8
(a) that the rates charged by the Corporation for sales of electricity within the Province 9
( i) should be established on the basis of annually forecasted costs for the supply, transmission 10
and distribution of the electricity, and 11
( ii) should provide sufficient revenue to the Corporation to permit it to earn a just and 12
reasonable return, in the context of the Corporation’s objective to earn sufficient income to 13
achieve a capital structure of at least 20% equity, 14
(b) that all the Corporation’s sources and facilities for the supply, transmission and distribution 15
of electricity within the Province should be managed and operated in a manner that is consistent 16
with reliable, safe and economically sustainable service and that will 17
( i) result in the most efficient supply, transmission and distribution of electricity, 18
( ii) result in consumers in the Province having equitable access to a secure supply of electricity, 19
and 20
( iii) result in the lowest cost of service to consumers in the Province, and 21
(c) that, consistent with the policy objectives set out in paragraphs (a) and (b) and to the extent 22
practicable, rates charged by the Corporation for sales of electricity within the Province shall be 23
maintained as low as possible and changes in rates shall be stable and predictable from year to 24
year. 25
26
Accordingly, New Clear Free Solutions submits that had the Electricity Act intended for all 27
subsections in s 68 to be read equally, it would not have differentiated between the terms 28
‘should’ and ‘shall.’ Therefore, it is important to make note of this distinction and query its effect 29
on the proceeding before the Board. 30
New Clear Free Solutions submits it is not reasonable to assume that the 20% equity objective is 31
a requirement because NB Power would have not been compliant with the legislation as soon as 32
New Clear Free Solutions Evidence Matter 375
9 January 18 2018
it was enacted. It is also not reasonable for the grid to be managed and operated as efficiently as 1
possible at all times, as that would require things that are outside of NB Powers control. 2
Applying the principles of statutory interpretation, the ordinary meaning rule requires the 3
meaning of shall to be an imperative, or a requirement. To the contrary, the normal meaning of 4
should is that of guidance. We offer the following sample from a Canadian Nuclear Safety 5
Commission regulatory document REGDOC 2.4.2 Probabilistic Safety Assessment: 6
Where this document is part of the licensing basis, the word “shall” is used to express a 7
requirement, to be satisfied by the licensee or licence applicant. “Should” is used to express 8
guidance or that which is advised. “May” is used to express an option or that which is advised or 9
permissible within the limits of this regulatory document. “Can” is used to express possibility or 10
capability10. 11
Sections 68 (a) and 68 (b) of the Electricity Act provide guidance on government policy and to 12
the greatest extent achievable, these sections should be followed. Based on the foregoing 13
principles of statutory interpretation, New Clear Free Solutions submits that the subsections in 14
section 68 are not requirements, and there are times when there are exceptions to this guidance. 15
When guidance is not followed the reasons should be justified, and reasonable, and if they are 16
not reasonable or justified there should be regulatory action taken to remedy the situation and 17
this should be done transparently and not inferred. 18
Sections 68 (c) is a legislative requirement. There are however conditions and context put on 19
these requirements which guides the board on how to balance NB Powers corporate financial 20
objectives with its responsibility to provide ratepayers the lowest possible rates that are 21
predictable and stable from year to year. 22
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10 http://nuclearsafety.gc.ca/pubs_catalogue/uploads/REGDOC-2-4-2-Probabilistic-Safety-Assessment-NPP-eng.pdf
New Clear Free Solutions Evidence Matter 375
10 January 18 2018
2.3 What guidance does Section 68 (a) of the act give? 1
68 It is declared to be the policy of the Government of New Brunswick 2
(a) that the rates charged by the Corporation for sales of electricity within the Province 3
( i) should be established on the basis of annually forecasted costs for the supply, transmission 4
and distribution of the electricity, and 5
( ii) should provide sufficient revenue to the Corporation to permit it to earn a just and 6
reasonable return, in the context of the Corporation’s objective to earn sufficient income to 7
achieve a capital structure of at least 20% equity, 8
9
An important thing to consider when interpreting legislation is who the legislation is speaking 10
too, and who it assigns responsibility too. Section 68 (a) is generally, speaking to the board. 11
However, it is very important to note that the 20% equity target is the “Corporations “objective 12
not the boards objective, and certainly not the ratepayer’s objective. It also gives direction to the 13
corporation and board on what the earning should be used for. The legislation directs NB Power 14
to use the earnings to build equity until at least a minimum 20% equity target is reached. This 15
prevents the corporation from issuing dividends until the target is met, and would also prevent 16
the corporation from issuing a dividend that would reasonably jeopardize the objective once it 17
has been achieved. 18
Building equity via earnings creates the same compounding effect that New Clear Free Solutions 19
has been promoting as its Carbon Tax and Investment Plan policy. This compounding effect can 20
be seen in the evidence provided by NB Power in its 10 year plan scenario analysis as the debt to 21
equity ratio is exponential over time. This policy is generally consistent with the tabled 22
legislation Climate Change Act. See Attachment J Bill 39 Climate Change Act 23
This section gives guidance to the board on the scope of what it should considered when 24
approving rates. It gives direction that rates should be set based on forward looking costs not 25
retroactive cost that have already occurred. 26
The proposed rate adjustment mechanism is not consistent with the intent of the legislation and 27
there have been no sufficient reasons put forward for the board to accept this deviation from the 28
intent of the legislation. We believe any such deviation from the intent of the legislation would 29
be required to be done in the publics interest, not to help NB Power manage its corporate 30
objectives. The legislation does not fix a date for NB Power to meet its objective because it could 31
lead to higher than needed and unstable and predictable rates and wouldn’t be in the spirit of the 32
legislation. It is our opinion that the 20% equity target should not be the focus of the board, it 33
should be NB Powers corporate focus. Its NB Powers responsibility to reach the target as soon as 34
possible, not the boards. 35
There is good reason utility regulation legislation is forward looking. It leads to stable rates and 36
predictable rates, and encourages the utility to “earn” its just and reasonable return. This 37
encourages NB Power to be more efficient and should lead to lowest possible rates, and higher 38
New Clear Free Solutions Evidence Matter 375
11 January 18 2018
earnings. If our rates are adjusted after the cost have occurred, it would lead to very unstable 1
rates and guarantee’s NB Powers earnings which removes their incentive to become more 2
efficient. 3
Deferral accounts are useful to smooth and stabilize rates when a utility has an approved 4
weighted average cost of capital and lumpy spending that creates rate instability, but NB Power 5
does not have a fixed return on equity, and therefore net earning and equity are used to smooth 6
and stabilize rates and the rate adjustment mechanism is not needed. The rate adjustment 7
mechanism being proposed is a solution to someone else’s problem. 8
The use of should does give the board the ability to also look to the past when determining rates. 9
Consideration of the past should be for information purposes only because you can’t change the 10
past you can only learn from it. Looking back should include such things as cost trending to help 11
determine if forecasts are reasonable. We also think the board should consider past rulings to 12
help inform their decisions. While the board is not required to uphold previous rulings, except 13
for the prudence of past capital spending that can not be changed anyway, it should give 14
significant weight to past rulings. Especially rulings that have been consistently upheld by its 15
predecessors. The PUB decisions in 1991 and 2001 on capacity planning have both upheld that 16
lowest cost of service should be measured by lowest rates not lowest revenue requirements. 17
In respect to just and reasonable return in the legislation, it is our opinion that this is a privilege 18
to NB Power for fulfilling its responsibilities to provide a safe and reliable fair and low-cost 19
service, and is not a requirement. 20
21
2.4 What guidance does Section 68 (b) of the act give? 22
(b) that all the Corporation’s sources and facilities for the supply, transmission and distribution 23
of electricity within the Province should be managed and operated in a manner that is consistent 24
with reliable, safe and economically sustainable service and that will 25
( i) result in the most efficient supply, transmission and distribution of electricity, 26
( ii) result in consumers in the Province having equitable access to a secure supply of electricity, 27
and 28
( iii) result in the lowest cost of service to consumers in the Province, and 29
30
Section 68 (b) is generally speaking to the corporation about the scope of its corporate 31
responsibilities in managing the service it provides to ratepayers, in order for the privilege to 32
earn a just and reasonable return. The policy speaks to the corporation about how it should be 33
managed and operated, and should inform the corporations Vision, Mission, Values and strategic 34
objectives and strategic plans. 35
New Clear Free Solutions Evidence Matter 375
12 January 18 2018
When setting rates, the board should be looking at the guidance in this section to verify if NB 1
Power is living up to its part of the bargain. This was quite eloquently put by JDI council Mr. 2
Stewarts in his final arguments last year. “We do not want to pay more simply to create an 3
ever increasing spending cushion for the utility. There is an obligation on the utility to 4
live up to their part of the bargain” 5
NB Powers first corporate responsibility is to supply the service of the safe, reliable, and most 6
efficient supply, transmission and distribution of electricity. This is the service that NB Power is 7
providing that enables it to earn a just and reasonable return from ratepayers. 8
The second corporate responsibility is to act fairly in providing this service. This enables the 9
matters such cost allocation to be considered by the board. 10
The third corporate responsibility is to ensure the lowest cost of service is provided by the 11
corporation to ratepayers. 12
13
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2.5 What are the requirements of Section 68 (c) and the conditions 15
put on those requirements? 16
(c) that, consistent with the policy objectives set out in paragraphs (a) and (b) and to the extent 17
practicable, rates charged by the Corporation for sales of electricity within the Province shall be 18
maintained as low as possible and changes in rates shall be stable and predictable from year to 19
year. 20
This section is speaking to both the board and NB Power. The responsibility for low and stable 21
rates is directed towards the board because it is the boards responsibility to set rates. The 22
requirement of stable and predictable from year to year is generally directed towards NB Power, 23
as it is their responsibility to ask for any changes to rates in their applications each year, as well 24
as the responsibility of forecasted rate trajectory within the 10 year plan. 25
The legislation is clear that the ratepayers have priority and the board should always act in the 26
publics interest even when it is against government policy guidance. If the government does not 27
like the decision, it can create a law or regulation. The term practicable balances this requirement 28
in such a way that the board must assure that NB Power can fulfill all its legal and corporate 29
responsibilities and sustain itself which would not be in the publics interest not to do so anyway. 30
It would not be practicable for the board to starve NB Power of money in trying to maintain low 31
as possible rates, but it can determine NB Powers returns and if they are living up to their part of 32
the bargain. 33
The requirement for stable and predictable rates from year to year is also balanced with the term 34
practicable. This is further clarified in section 103 (3) of the act which allows for the corporation 35
to apply for interim rates. We think the legislation intends for this years and next years proposed 36
rate increase by NB Power to be know by ratepayers. It is very important to NB ratepayers to 37
New Clear Free Solutions Evidence Matter 375
13 January 18 2018
know in advance what rates are going to be, so they can appropriately budget themselves. A 1
lower rate than expected should always be considered though as it acts in the publics interest. 2
For example, if NB Power asked for a 3% rate hike next year we believe the legislation would 3
require NB Power to be asking for interim rate relief mentioned in section 103(3) of the act. The 4
standard the board should apply to interim rates should be much higher than a normal rate 5
hearing. Losses in expected net earnings due to an unforeseen but reasonably expected event like 6
an ice storm would not pass this test. NB Power is already receiving a significant risk premium 7
with return on equities in excess of 10% throughout the 10 year plan. It would have to pass a test 8
that would show it would be deleterious to the corporation if the interim relief was not met. 9
2.6 Is it plausible that section 68 (b) (iii) “least cost of service to 10
customers” is meant to be interpreted as least cost revenue 11
requirement as compared to least cost rates? No 12
The policy is clear that priority is given to low as possible rates. Lowest possible revenue 13
requires significantly higher rates as demonstrated in NB Powers evidence. 14
The boards predecessor, the PUB, has twice ruled that lowest cost of service should be reflected 15
as rates not revenue. This has also historically been NB Powers position in both of those 16
proceedings on capacity planning in 1991 and 2001. It appears there was a change in NB Powers 17
senior managements interpretation in NB Powers internal IRP in 2010. This position has never 18
been supported in a board decision, and if there was such a change in position it should require a 19
very detailed reason for their decision, and could be subject to a judicial review. 20
The 2011 energy blueprint, which should be used to show legislative intent, does not support the 21
interpretation of lowest revenue requirement vs lowest rates either. 22
Even in NB Powers own evidence, NBP (NBEUB) IR-214 Attachment - Average Cost of 23
Service - 2017 IRP, shows that cost of service is described as $/kWh not revenue requirement. 24
New Clear Free Solutions Evidence Matter 375
14 January 18 2018
1
2
The revenue requirement is NB Powers perspective not the customers. NB Power has a bad habit 3
of trying to use one metric to infer another and sometimes that is not valid and is bad practice. 4
Specifically, in this case revenue requirement can infer rates, but only if the load stays the same. 5
It is not appropriate to compare two different revenue requirements when the load changes. It 6
essentially changes the amount of service provided. The difference between the lowest cost 7
supply plan and the integrated plan is not because of reduced or deferred investments, the 8
revenue changed because NB Power sold less energy or provided a smaller amount of service. 9
The comparison NB Power made when choosing between the supply plan and integrated plan is 10
tantamount to comparing NB Powers revenue requirement and Hydro Quebec’s revenue 11
requirement and claiming that NB Powers is better. 12
13
14
15
New Clear Free Solutions Evidence Matter 375
15 January 18 2018
2.7 Does section 103 (7) of the act require the board to approve NB 1
Powers revenue requirement when approving just and 2
reasonably rates? - No 3
103( 7) In approving or fixing just and reasonable rates, the Board shall base its order or 4
decision on the Corporation’s revenue requirements, taking into consideration 5
(a) the policy set out in section 68, 6
(b) the most recent integrated resource plan approved or deemed to be approved by the 7
Executive Council under section 100, 8
(c) the most recent strategic, financial and capital investment plan filed with the Board under 9
section 101, 10
(d) any requirements imposed by law on the Corporation that may be relevant to the 11
application, including, without limitation, requirements regarding demand-side management and 12
energy efficiency plans and renewable energy requirements, 13
(e) any directive issued by the Executive Council under section 69 that may be relevant to the 14
application, and 15
(f) any policy established by a regulation made under paragraph 142(1)(f) that may be relevant 16
to the application. 17
103( 8) In approving or fixing just and reasonable rates, the Board may take into consideration 18
(a) accounting and financial policies of the Corporation, 19
(b) matters of cost allocation and rate design, 20
(c) customer service related charges, 21
(d) the Corporation’s demand-side management and energy efficiency plans, and 22
(e) any other factors that the Board considers relevant. 23
24
The legislation does not give the responsibility to the board to approve the revenue requirement 25
only that it must make its decision or order “based” on it. The legislation does not give the board 26
direct control over NB Powers operational spending or capital projects under $50 million, only 27
the rates NB Power charges for the services it provides. This has already happened when the 28
board has deemed spending not prudent, but NB Power has spent the money anyway. 29
30
The only real control over spending the board has is with regards to capital projects over $50 31
million. The board can also compel NB Power to spend operational money on providing 32
New Clear Free Solutions Evidence Matter 375
16 January 18 2018
information. The board can also control who should provide this information, and what the scope 1
of the information is. 2
The main purpose of this section of the legislation is mainly to determine the required scope and 3
relevancy of the rate hearings. In addition, the board “may” also consider section 103 (8). This is 4
like the intent in sections 107 (11) for approval of capital projects over $50 million which 5
determines the scope and relevancy of approving capital projects. 6
7
2.8 If the board is not given direct control over operational and 8
capital spending under $50 million how does it regulate NB 9
Power spending? Rates 10
At a minimum we feel the board should recommend in a decision that the spending not be 11
undertaken and why it does not think it is in the publics or shareholders interest. If NB Power 12
spends the money anyway NB Power can answer to its shareholder for non-prudent spending. 13
The board can also adjust rates if it chooses to do so, depending on the circumstances. We have 14
made a recommendation to the board in our rate adjustment mechanism section on how to do 15
this. 16
2.9 How should the board interpret lowest possible rates for this 17
hearing? Current Rates 18
We feel the board should adopt the view for this hearing that lowest possible rates should be 19
viewed as the current rates. 20
Operational costs should be assessed by the board by lowest cost and capital spending should be 21
assessed by return on investment and its effect on rates, unless it can be determined it is required 22
to provide a safe and /or reliable system. 23
2.10 How should the board balance NB Powers corporate objective of 24
20% equity and lowest possible rates? 25
We generally agree with NB Power that till the target is met the revenue requirement “should” 26
demonstrate progress toward the equity target. It does not require a rate increase to do so 27
however. There are many ways to reach objectives and rates should be the last resort not the first 28
resort. This should also apply to other issues such as cost allocation. There is an instinct to try 29
and fix all problems with rates when other methods should be considered first. When all you 30
have is a hammer everything looks like a nail, and we encourage NB Power to look for better 31
tools. 32
New Clear Free Solutions Evidence Matter 375
17 January 18 2018
There has been no evidence supplied by NB Power that shows progress to the equity target will 1
not be made even without the rate increase, except for the scenario they provided to us with no 2
rate increase for the entire 10 year plan. Even then there is no increase in capital structure for 6 3
years. 4
5
2.11 Is it plausible that the legislation intended the AMI cost benefit 6
to not include lost revenue from the reduced Kwh? No 7
The cost-effective test NB Power has used to justify the AMI spending is essentially the TRC 8
test. This test does not inform NB Power or the Board about the affect this capital project has on 9
rates or net earning without considering lost revenue. It is not possible to assess return on 10
investment without including this. This is not the intent of the legislation and the consequences 11
of adopting this interpretation would be significantly against the public interest. 12
2.12 Who does the legislation assign responsibility to develop the 13
IRP? NB Power 14
An integrated resource plan is NB Powers business plan, and as such it should be their 15
responsibility to develop it. The legislation assigns NB Power the responsibility to develop it in 16
section 100 (2) 17
100( 2) Subject to any changes requested under subsection (7), an integrated resource plan shall 18
be developed by the Corporation in accordance with the principles of least-cost service, 19
economic and environmental sustainability and risk management. 20
The test year, 10 year plan, and Integrated Resource Plan are all the same plan just looking at it 21
from different times. The test year is the current year of the IRP, the 10 year plan is the first 10 22
years of the IRP and the IRP is the long term plan. These should all be consistent with each other 23
as per section 101 (3) 24
25
101( 3) A plan filed under subsection (1) shall not be inconsistent with the latest 26
integrated resource plan approved or deemed to be approved under section 100. 27
It was not appropriate for Mr. Fury to claim it needed direction from the board regarding what 28
assumptions to use if it were to extend the 10-year plan at motions day. These assumptions 29
should have already been approved in the IRP. 30
New Clear Free Solutions Evidence Matter 375
18 January 18 2018
2.13 What are the requirements put on the development of the IRP in 1
section 100(2) of the Act? 2
The legislation requires a balance between, least-cost service, economic and environmental 3
sustainability and financial risk. This balance has been confirmed by NB Power in their response 4
to our IR’s. 5
In the past, the balancing between the economy and environment often conflicted with least cost, 6
because renewables were more expensive. Therefore, there was a balance put in the legislation, 7
because the environment and economy must go hand and hand. The pillars of sustainability only 8
protect society if they are balanced. In the last few years the cost of renewable energy has 9
become lower cost than fossil fuels and still trending down, and there is no longer any conflict, 10
with least cost environment and economic sustainability and financial risk all working together 11
for a strong sustainable society. 12
In balancing these requirements NB Power can insert higher cost options. As Mr Furey said on 13
motions day, the lowest cost is not always the best cost. This must be done transparently though. 14
The principles of least cost should be done transparently and with accountability. 15
The least cost plan selected should be selected by the strategist software and must not contain 16
any policy that is not a legislated requirement like the RPS. This avoids any possible human bias, 17
and should be the baseline against all other changes. The baseline should be known and 18
transparent to ratepayers, the government, and the board. 19
If NB Power is going to insert something that is not the least cost, like it did with Lepreau at the 20
end of the IRP, it must be known to the government and the cost needs to be identified and 21
justified. It is not reasonable to accept deviations from least cost without justification and 22
accountability to ratepayers. If it is not done this way the board will not know what is 23
government policy or what is NB Power policy. 24
2.14 Who approves the IRP? Executive Council 25
The legislation then assigns responsibility to the government to approve the IRP within a certain 26
timeframe or it is deemed approved after 90 days. The executive council can inject additional 27
government policy. This should also be done transparently and with accountability. Any 28
additional cost put on rates via government policy decisions should also be known and contained 29
in the IRP, and the request should be transparent. Energy policy is too important to the New 30
Brunswick economy to be making un-costed decisions. 31
2.15 Who reviews and informs the Executive Council about the IRP? 32
The Board 33
The IRP is within the scope of both the rate hearing and capital project approval process, and the 34
board should be reviewing the IRP every year. If the board would like to see additional 35
information, or think the Executive council needs to see additional information in the IRP, the 36
legislation gives the board the power to order NB Power to do so. We encourage the board to use 37
New Clear Free Solutions Evidence Matter 375
19 January 18 2018
this process every year as it is critical that the Executive Council get feedback from the economic 1
regulator that NB Powers business plan is prudent and one that will deliver lowest possible rates 2
now and in the long term. It can be as simple as requesting NB Power to submit that the board 3
finds the IRP to be prudent. 4
Silence should not be construed as approval. The three levels of government should be speaking 5
to each other through the IRP in a transparent way to ratepayers. 6
2.16 Who has final approval of the capital projects within the IRP? 7
The Board 8
While the Executive Council approves the IRP, it does not approve the spending. The board has 9
the final say over the projects within the IRP and is an important responsibility. The board 10
should take the approach that executive councils approval of the IRP is policy guidance not a 11
requirement, and the board should always act in the public’s interest. If a project is not prudent 12
the board should not approve it. If the executive council still wants to proceed the Executive 13
Council can make a law or regulation, then the board will have to approve it, but the final say 14
will always be the board. 15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
New Clear Free Solutions Evidence Matter 375
20 January 18 2018
3.0 RATE INCREASE 1
3.1 Should the Board grant the 2% average rate increase? - No 2
We ask the board to deny the proposed rate increase by NB Power. The reasons for our request 3
for denial is that the application has not passed the lowest possible rates test in the test year, 10 4
year plan or 25 year integrated plan. The evidence provided by NB Power clearly shows that if 5
they were to cancel the energy smart programs or portions of them that the rate increase would 6
not be needed, and would result in even larger net earning and progress on their equity target. 7
Even if NB Power continued to spend on the energy smart program without the rate increase the 8
revenue requirement shows that NB Power would still be profitable, and progress made on the 9
equity target. 10
We believe that viable alternatives must always be considered. NB Powers least cost supply plan 11
shows that the proposed NB Power smart energy programs are driving NB powers earnings 12
down, delaying progress in NB Powers equity target, will have little environmental benefits, 13
creating inequity between participants and non-participants and will create higher than possible 14
rates in the test year all the way to the end of the IRP timeframe. 15
16
17
New Clear Free Solutions Evidence Matter 375
21 January 18 2018
1
2
3
4
5
6
7
New Clear Free Solutions Evidence Matter 375
22 January 18 2018
The energy smart programs also do not pass an equitable test for non-participant ratepayers with 1
less than 1% of ratepayers benefiting and the other 99% paying for it. 2
3 4
Not only does the energy smart programs not pass the lowest possible rate test, the energy smart 5
programs being offered by NB Power fail almost all the tests. Many of the programs do not pass 6
the total resource cost test or even NB Powers own self determined primary metric Program 7
Administrator Cost Tests. The only test that passes with flying colors is the participant test, 8
which the evidence shows is less than 1% of ratepayers. 9
10
11
New Clear Free Solutions Evidence Matter 375
23 January 18 2018
The legislation is clear that NB Power must have DSM programs, but it does not require these 1
programs to be approved by the board. New Clear Free Solutions has offered 4 viable 2
alternatives that will lower rates and increase earnings. These are: 3
1. Industrial Electrode Boilers 4
2. Electrification of Transportation 5
3. Solar Leasing 6
4. On Bill Efficiency loans 7
These viable alternatives are wins from all perspectives. From ratepayers perspective, NB 8
Powers corporate perspective, gas utilities perspective, and the environments perspective 9
everybody wins. There are no looser in these programs only winners. 10
Unlike the 40% Renewable Portfolio standard there is no legislated DSM target, and without that 11
this spending should not be deemed prudent, and even with DSM targets these programs would 12
not pass the prudency test because there are viable alternatives that are lower cost. We want to be 13
clear to the board and NB Power that we are not against efficiency, we are just don’t approve of 14
the programs being proposed by NB Power. 15
3.2 Can you provide an graphical overview of the proposed 16
electrode boiler DSM program? Yes 17
18
19
New Clear Free Solutions Evidence Matter 375
24 January 18 2018
3.3 Which of the California Tests Should the Board use to test NB 1
Powers DSM programs? All of them 2
We believe all the California tests should be used but in various ways to support different 3
objectives. In general, we support the methods approved by the PUB in the 1991 decisions on 4
capacity planning. Specifically, we support this from the decision: 5
“The Board believes that the fourth criteria [RIM] should be used as a standard against which 6
NB Power’s approach may be compared to ensure that no customer is worse off as a result of the 7
adoption of a DSM project.” 8
Well thought out programs can be designed so that all tests can be passed, even without any 9
legislated targets. The Rate Impact Measure should always be the test the board applies to DSM 10
projects. The TRC test should be used to assure NB Power is not pushing less efficient measures 11
and protects ratepayers. The TRC test effectively is a test of the technology. The participant test 12
and the program tests should be used together to ensure fairness and equitable program design. 13
The RIM test is from both the ratepayer and corporation’s perspective depending on rate design. 14
A lower RIM can affect rates or earning or combination of both, and that is why it should be the 15
primary test. 16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
New Clear Free Solutions Evidence Matter 375
25 January 18 2018
4.0 ADVANCED METERING INFASTRUCTURE 1
4.1 Should the Advanced Metering Infrastructure be approved? - No 2
New Clear Free Solutions requests that the board not approve the Advanced Metering 3
Infrastructure project. We ask this for the same reasons as our request for the board to not 4
approve the requested rate increase. 5
In addition, we provide these additional comments. Capital projects are the only way the board 6
can control NB Power spending. Due to the small nature of DSM spending this may be the only 7
DSM capital project that is required to be approved by the board. The board should view this as 8
not only approval to spend capital on AMI, but the whole Reduce and Shift Demand (energy 9
smart) programs. It should also be viewing this as a test on NB Powers third strategic objective 10
to defer investments to achieve their second strategic objective to pay down debt. 11
The board has questioned RASD spending before, and member Herron made it clear that the 12
board needed to see the linkage between investing in efficiency and deferring investment in 13
generation. The comparison we provided above, using the evidence supplied by NB Power, 14
shows the linkage. It shows that this is not in the ratepayer’s interest or the utilities interest. 15
It is not appropriate for NB Power to not be including lost revenue due to reduced kwh in their 16
current assessment of AMI, especially if it is not required for reliability or safety reasons. 17
Without taking lost revenue into account there is no way for the board to see its affects on rates 18
or NB Powers earnings and capital structure. It is not plausible that the legislation intended the 19
board to approve capital spending without knowing its affect on rates. It is also not consistent 20
with fundamentals of Net Present Value that should consider cashflows in and out. 21
4.2 What is 'Net Present Value - NPV'? 22
Net Present Value (NPV) is the difference between the present value of cash inflows 23
and the present value of cash outflows. NPV is used in capital budgeting to analyze the 24
profitability of a projected investment or project.11 25
26
27
28
29
30
31
11 https://www.investopedia.com/terms/n/npv.asp
New Clear Free Solutions Evidence Matter 375
26 January 18 2018
5.0 RATE ADJUSTMENT MECHANISM 1
5.1 Should the board approve the rate adjustment mechanism? No 2
The test the board should apply to this request is, will it lead to lowest possible, stable and 3
predictable rates? This mechanism will lead to possibly higher rates, less stable and less 4
predictable and its purpose is to help reach NB Powers corporate objective and not in the publics 5
interest. NB Power can ask for interim rates if it wants too, but the board should make it clear to 6
NB Power that the standard would have to be much higher than lost net earnings and that NB 7
Power would have to demonstrate that it is in the public interest to do so. 8
NB Powers primary rate adjustment mechanism is the 10 year plan which they have already been 9
using but not very transparently. Any changes in the planned rate trajectory should be noted in 10
each 10 year plan with reasons justifying the changes. 11
In contrast to the NB Powers proposed rate adjustment mechanism New Clear Free Solutions 12
offers the board a similar solution as a mechanism to adjust rates for un-prudent operational 13
spending and under $50 million capital projects. If the board adjusts rates based on un-prudent 14
spending in the test year, it will affect not only the test year but the all subsequent years as well. 15
This could have the effect of altering a long-term rate trajectory. If the board finds un-prudent 16
spending in a test year it should spread these costs out over a reasonable amount of time and 17
adjust the current years rates based on that, and not the full amount in the test year. 18
19
20
21
22
23
24
25
26
27
28
New Clear Free Solutions Evidence Matter 375
27 January 18 2018
6.0 INTEGRATED RESOURCE PLAN 1
6.1 How should the board consider the IRP in both determining 2
rates and approval of capital project in these hearings? 3
While the board does not “approve” the IRP is should be testing it for prudence and 4
reasonableness. The board should be testing if the methodology, assumptions and applied 5
principles of section 100 (2) are reasonable. The board should also consider if good project 6
management has been applied to the plan, as well as good quality management. The board 7
should consider the approval by executive council as only policy guidance, as opposed to things 8
like the Renewable Portfolio Standard which is policy requirements. Policy guidance should 9
always be tested for prudence as this is the key function of the board regarding the IRP. 10
One of the key things the board should consider when reviewing policy guidance is if the 11
executive council had enough information to make a good balanced decision. We feel that is not 12
the case with the energy smart program. There is nothing in the IRP that shows its effect on rates, 13
which is a requirement of the act, and it did not inform the shareholders on their return on 14
investments, earnings, or capital structure. 15
The only comparison, in the IRP, that is made without the energy smart programs is the least cost 16
supply option, and it only compared the difference between revenue requirements of two plans 17
with different load forecasts which is not appropriate. The sensitivity analysis performed by NB 18
Power, in the IRP, all contain the energy smart program, so there is no real viable alternative 19
comparison made in the IRP. 20
There has been a considerable amount of new information brought out in these hearings that 21
shows the energy smart program is not in anybody’s interest except for 1% of ratepayers who are 22
the participants. The board needs to consider that the Executive Council was not aware of this 23
information when it made its decision to approve the IRP. 24
6.2 What additional information should the board order NB Power to 25
include in the next iteration of the IRP to be approved by 26
Executive Council? 27
We would like the board to order the requested information we provided to NB Power in the 28
“what was said” portion of the IRP stakeholder consultations at a minimum. We are also very 29
concerned about the methodology NB Power is using in developing their IRP, and will highlight 30
our concerns via cross examination and final argument and make any additional requests then. 31
32
33
34
New Clear Free Solutions Evidence Matter 375
28 January 18 2018
NB Power did not only ignore our request for a IRP with increasing renewables even as a 1
sensitivity, they ignored all New Brunswickers, as it was clear that it was the highest priority. 2
3
We also request that the board order NB Power to follow the methodology approved by the PUB 4
in its 1991 capacity planning decision. 5
6
7
8
9
10
11
12
13
14
15
New Clear Free Solutions Evidence Matter 375
29 January 18 2018
6.3 Is the proposed supply plan by NCFS in the “What was said” 1
portion of the IRP technically feasible? Yes 2
We have included Attachment A Pan Canadian Wind Energy Study Atlantic Summary, and 3
Attachment B Pan-Canadian Wind Integration Study Summary Report that confirms the amount 4
of wind power NCFS suggesting is technically feasible. 5
From Attachment A 6
7
The supply mix shown in the “what was said” document shows % in Province Generation and 8
did not include the percent including exports. Below is a chart showing the % total generation. 9
Generation MWh/Year % Total Generation Stage 1 RPS- Percent Of In Province Generation to In
Province Demand
Hydro 3,412,000 18% 25%
Geothermal 4,094,400 22% 30%
Biomass 706,720 4% 5%
Wind 4,094,400 22% 30%
Hydro HQ 5,720,434 31% 7%
Natural Gas 607,478 3% 4%
(Curtailment) 102,166 0.55%
Total 18,533,265 100%
New Clear Free Solutions Evidence Matter 375
30 January 18 2018
6.4 Is the proposed supply plan by NCFS, in the “What was said” 1
portion of the IRP, materially different economically than the 2
modeling NB Power did in matter 336 and Exhibit NBP14.58 of 3
this hearing using the strategist modeling software? No 4
We want to remind the board that NB Power was asked in matter 336 about the methodology of 5
our modeling and they did not have any issues with the methodology itself. NB Power only had 6
concerns with assumptions and primarily the displaced fuel cost that was used, or what was 7
referred to as the PPA portion of the model. In the updated version of the model, that we 8
provided with our submission of comments on NB Powers IRP, we took the recommendations 9
from NB Power regarding that assumption. We provide the following comparison of displaced 10
fuel and purchased power cost from the strategist software and our accumulated reinvestment 11
(Fuel and PP displaced costs) portion of our modeling in the what was said report. 12
13
14
This shows that the modeling done by NCFS is conservative compared to the modeling NB 15
Power provided. 16
17
18
New Clear Free Solutions Evidence Matter 375
31 January 18 2018
6.5 Is NB Powers IRP consistent with the new Climate Change Act 1
tabled legislation? No 2
It will be impossible for the province to meet the 2030 target with the current IRP. NB 3
Power emissions are going up not down. There has also been a commitment to phase out 4
coal by 2030 that is not in the IRP. 5
6
7
8
9
10
11
12
13
14
15
New Clear Free Solutions Evidence Matter 375
32 January 18 2018
6.6 Is NB Powers IRP putting the province at substantial financial 1
risk of getting the Federal Backstop being applied to New 2
Brunswick? YES 3
It is not the policy that the federal government wont like, it will be NB Powers IRP. We need to 4
show them how we can significantly reduce our emissions without any additional measures. NB 5
Power’s IRP will not satisfy the Federal government, and if we get an additional gas tax it will 6
be NB Powers fault. 7
As well NB Powers IRP does not fulfill the environmental sustainability pillar for section 100 8
(2) of the Act. 9
10
The plan to start investing in even more efficiency to help with climate change is going to make 11
rates even higher, and more than likely not be able to reduce emissions enough to satisfy the new 12
climate change act or the federal government. 13
14
New Clear Free Solutions Evidence Matter 375
33 January 18 2018
6.7 Is the proposed Climate Change Act, that is tabled in the 1
legislature, fundamentally different than the policy NCFS has 2
been promoting since Matter 272? No 3
The province has created a fund like NCFS has been promoting in section 4 (1). 4
4(1) There is established a fund called the Climate 5
Change Fund. 6
This legislation also allows these funds to be invested in section 4 (4) like NCFS has been 7
promoting. 8
4(4) The Minister of Finance may invest the money in 9
the Fund in the manner authorized by the Trustees Act 10
and may invest in securities issued under the Provincial 11
Loans Act. 12
13
The funds can be used for emission reductions 4 (8) (i) like NCFS has been promoting. 14
4(9) The assets of the Fund may be used 15
(a) to pay the costs of measures for: 16
(i) greenhouse gas reduction, limitation, avoidance 17
or capturing; 18
The fund is unique in Canada in that it has a mechanism to direct the return on investments back 19
into the fund to be reinvested again in section in s 4 (8)(C). This has been the cornerstone of the 20
policy that NCFS has been promoting since matter 272, and when investments are made into 21
renewables it creates a very powerful compounding effect that will provide all the cash flow 22
needed to transition to a low carbon economy. The extra cash flow from the compounding effect 23
will be created by the displacement of fuel and purchased power without the need for rate 24
increases. 25
4(8) The Fund shall be credited with the following 26
amounts: 27
(c) the income generated by the investment of the 28
sums credited to the Fund 29
30
NB Power will have access to these fund for capital expenditures into emissions reductions, as 31
per section 4 (9) (b) and 4 (10) (a) like NCFS has been promoting. 32
4 (9)(b) to reimburse any department or agency of the 33
Government of New Brunswick or any provincial 34
Crown corporation that makes an advance to cover 35
the costs of measures referred to in paragraph (a). 36
37
and 38
39
New Clear Free Solutions Evidence Matter 375
34 January 18 2018
4(10) For greater certainty, the assets of the Fund may 1
be used to pay any operating or capital expenditure related 2
to any measure referred to in subsection (9). 3
6.8 Do you think the proposed Climate Change Act that is tabled in 4
the NB Legislature the best in the country and a model to be 5
followed by other Provinces? Yes 6
Please see Attachment D which is a letter to an anonymous reader describing why we think it is 7
the best policy in the country. As well please find below a link to a TMI Podcast with Host 8
David Archer in which we discuss many of the issues in these hearings 9
http://tmi.twxnet.com/ 10
According to NB Powers evidence this will be the effect on rates if the Federal GHG plan is 11
forces upon us. 12
13
New Clear Free Solutions Evidence Matter 375
35 January 18 2018
6.9 Of all the Sensitivity Analysis performed By NB Power can you 1
rank them in order from least cost rates to highest cost rates 2
and indicate which ones have wind power in them? Yes 3
4
5
6
7
8
9
New Clear Free Solutions Evidence Matter 375
36 January 18 2018
6.10 Are the assumptions for capital costs and O and M costs for 1
wind power, that was used in NB Powers IRP, reasonable 2
compared to other reliable sources of publicly available data or 3
actual cost? No 4
Please see the following: 5
Attachments C, E, K, and L 6
Some additional links 7
https://www.greentechmedia.com/articles/read/irena-renewable-energy-competitive-fossil-fuels-8
2020#gs.3vIJcyw 9
https://www.vox.com/energy-and-environment/2018/1/16/16895594/colorado-renewable-10
energy-future 11
http://www.cbc.ca/news/canada/calgary/wind-farm-rachel-notley-alberta-university-calgary-1.4448323 12
13
6.11 Is NB Powers long-term load forecasts reasonable? No 14
The only credible solution to climate change is the electrification of our economy with low 15
carbon electricity and this is not reflected in the load forecast. 16
6.12 Is NB Powers long-term fuel prices reasonable? No 17
With renewables now lower cost than fossil fuels it is unlikely fuel and purchase prices will 18
increase as assumed by NB Power. 19
20
6.13 Can you provide some background information resources on the 21
strategist software? Yes 22
Please see Attachments G and H. 23
24
6.14 Can you provide some additional background resources on 25
efficiency cost effectiveness? Yes 26
Please see Attachments F and I. 27
New Clear Free Solutions Evidence Matter 375
37 January 18 2018
7.0 10 YEAR PLAN 1
7.1 What additional information should the board order NB Power to 2
include in the next 10 year plan? 3
We would like to see the 10 year plan extended to the end of the IRP. We recommend that, to the 4
extent practicable, the same assumptions being used in the IRP be used in this plan. This does 5
not need to be done every year but years with a new IRP or substantially changed IRP. 6
We will keep track of any other request we may have over the hearings, and will make any 7
additional requests or clarifications in our final argument. 8
New Clear Free Solutions Evidence Matter 375
38 January 18 2018
8.0 LIST OF ATTACHMENTS 1
8.1 Attachment A Pan Canadian Wind Energy Study Atlantic 2
Summary 3
8.2 Attachment B Pan-Canadian Wind Integration Study Summary 4
Report 5
8.3 Attachment C Lazard’s Levelized Cost of Energy Analysis—6
Version 11.0 Summary 7
8.4 Attachment D Letter to Anonymous Reader by NCFS 8
8.5 Attachment E lazard-levelized-cost-of-energy-version-110 9
8.6 Attachment F California Standard Practice Manual 10
8.7 Attachment G Strategist Planning Solution 11
8.8 Attachment H Xcel Energy Strategist Modeling and Outputs 12
8.9 Attachment I Understanding Cost-Effectiveness of Energy 13
Efficiency Programs 14
8.10 Attachment J Bill 39 Climate Change Act 15
8.11 Attachment K EIA Cost and Performance Characteristics of New 16
Generating Technologies Annual Energy Outlook 2017 17
8.12 Attachment L IRENA_2017_Power_Costs_2018_summary 18
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